We study government investment across US states and counties in a Q-theoretical framework. We develop novel measures of regional government Qs, derived from municipal bonds, and private sector Qs, derived from a decomposition of corporate Qs. The main findings are that government investment is positively correlated with government Qs and negatively correlated with private sector Qs. We explain these findings with a model in which governments invest to maximize social welfare, considering their impact on private investment. Accordingly, we find stronger effects in regions with large subsidy programs, low levels of corruption, and following adverse employment shocks. Overall, the findings have two key implications: (1) Government investment crowds-in private sector activity, and (2) Governments leverage information from capital markets to inform government investment decisions.